SOLA HAKIM MEDICAL RESEARCH TRUST, MUMBAI vs. DIT (E), MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M):

This is an appeal preferred by the assessee against the rejection of grant of approval u/s.80G of the Income Tax Act (hereinafter referred to as an Act) by the ld. Director of Income Tax (Exemption) [DIT(E) in short]. 2. Brief facts of this issue are that the assessee trust had preferred an application for the first time on 03/12/2008 for grant of approval u/s.80G of the Act even though the trust is in existence for the last 30 years and had been granted registration u/s.12A of the Act on 18/04/1977. The assessee trust for the A.Y.2010-11 showed long term capital gain of

2 ITA No.7781/Mum/2011 Sola Hakim Medical Research Rs.75,04,500/- and claimed exemption for the same u/s.11(1A) of the Act. The assessee submitted before the ld. DIT(E) as under:- "Exemption U/s.11(1A) : A part of the trust property was sold during the A.Y. 1983-84 for a consideration of Rs.9,00,000/- which was credited in the books as advance received. During the year under consideration, the balance property has also been sold for a consideration of Rs.68,00,000/-. Computation of long terms capital gains on sale of property: Sale consideration received in A.Y. 1983-84 9,00,000/- Sale consideration received in A.Y. 2010-11 68,00,000/- 77,00,000/- Less: Cost of property 1,95,500/- (As per Gift deed dated 30 March 1972} Capital Gains 75,04,500/- Less: Exempt u/s. 11(1 A) 75,00,000/- Balance to be treated as income 4,500/- ======= * Out of the total consideration of Rs.75,04,500/- received on sale of property, an amount of Rs.75,00,000/- has been invested in Tax Savings Bonds and Bank deposits. Accordingly, the capital gains too this extent is exempt in terms of section 11(1A) of the Income-tax Act, 1961."

2.1. The assessee submitted before the ld. DIT(E) that though approval for sale of part of the land belonging to the assessee trust was indeed obtained from the Charity Commissioner way back in the year 1982, the assessee had inadvertently omitted to include a part of a particular survey number while obtaining the approval from the Charity Commissioner. In order to rectify the same, the assessee again applied for permission of the Charity Commissioner by making an application u/s.36-1(a) of the Bombay Public Trusts Act, 1950 on 18/11/2009 and the same was pending before the Charity Commissioner. 2.2. The assessee also filed a copy of sale deed and the agreement of sale dated 21/04/2009 entered into between the assessee and “New Shri Swami Samartha Borivade Village Co-operative Housing Society Ltd.” The

3 ITA No.7781/Mum/2011 Sola Hakim Medical Research assessee also drew the attention of the ld. DIT(E) to the relevant portions of the sale agreement as under:- “4. It is observed from the copy of sale deed filed, the agreement of sale is dated 21.04.2009 which is between the trust and 'New Shri Swami Samartha Borivade Village Co-operative Housing Society Ltd. The relevant portions of the sale agreement is reproduced as under :- "(f) The said property is reserved under the Thane Development Plan for 'Playground'. (g) As the purchaser has already acquired all the adjoining surrounding pieces of land the purchaser requested the vendors to sell the said property which the vendors have agreed on 'as is where is basis' for the consideration and on the terms and conditions hereinafter mentioned including the condition that sanction of the Charity Commissioner shall be obtained for sale of the said property. (h) This agreement is stamped with the same amount of stamp as would be affixed on a conveyance under Article 25(b) of the Bombay Stamp Act. Subject to permission of the Charity Commissioner, the parties intend to execute in the same transaction several documents, including power of attorney, conveyance etc and therefore for purposes of section 4 of the Bombay Stamp Act, this Agreement for Sale is deemed to be 'principal instrument' and is stamped with the maximum stamp affixable. II. The purchaser confirms that prior to entering into this agreement has made necessary enquiries and satisfied itself as to the state of the vendors title to the said property, therefore the purchaser confirms that this agreement is on "as is where is basis" and on an understanding that except for : (a) obtaining sanction of the Charity Commissioner and (b) execution of a forma! conveyance conveying and transferring the said property there are no obligations remaining on the vendors. The purchaser confirms that such obligation as the vendors owed to the purchaser as regards making out a title to the said property have been discharged, there are now DO other obligations remaining on part of the vendors except as mentioned hereinabove. III. The vendors hereby declare that: (a) No other person except the vendors have any right, title, claim or demand in respect of the said property or any part thereof (b) The said property is reserved under the Development Plan for playground.

4 ITA No.7781/Mum/2011 Sola Hakim Medical Research IV. Simultaneously with the execution of this agreement the vendors shall apply for sanction of the Charity Commissioner permitting the sale of the said property to the purchaser and purchaser confirms that it shall be responsible for obtaining sanction of the Charity Commissioner including all costs, legal fees to be incurred etc. V. On issuance of sanction of the Charity Commissioner, the vendors shall execute a conveyance of the said property in favour of the purchaser in the form annexed hereto marked as Annexure 'B'. VI. At the time of executing conveyance, the vendors shall also execute a writing, recording that they have given possession of the said property to the purchaser"

2.3. The ld. DIT(E) observed that stamp duty has been paid by the assessee on 15/04/2009. The ld. DIT(E) observed that assessee has entered into conveyance deed with the purchaser even though no prior approval of Charity Commissioner had been taken before sale of the property. The ld. DIT(E) observed that assessee had preferred an application seeking approval for sale of property before the Charity Commissioner on 18/11/2009 which is after the date of execution of sale deed. The ld. DIT(E) reproduced relevant portion of the said application made before the Charity Commissioner as under:- "8. The applicant submits that the trustees had entered into agreement dated 17!h June, 1982 for sale of approximately 83 pieces of land situated at Village Borivade, Taluka District Thane on the terms and conditions more specifically mentioned therein with Samarth Development Corporation. Accordingly, the trustees of the trust in question filed application no. 235 of 1982 with the office of the Charity Commissioner, Maharashtra State, Bombay. By order dated 31^' July, 1982, the Hon'ble Charity Commissioner, Maharashtra State, Bombay was pleased to pass necessary orders to grant permission for sale of the property. In the meantime, the interest of the purchaser came to be assigned to New Shri C Swami Samarth Borivade Village Co-operative Housing Society Limited. 9. The applicant submits that during the course of time, a Deed of Conveyance . came to be executed on 9th December, 1989 which mentions the remaining lands for which the sanction was granted except the land in question which remained inadvertently to be covered under the Deed of Conveyance. A copy of the Deed of Conveyance was forwarded to the office of the Charity Commissioner, Maharashtra State, Bombay with request for

5 ITA No.7781/Mum/2011 Sola Hakim Medical Research extension of time granted under order dated 31st July, 1982, the Hon'ble Charity Commissioner, Maharashtra State, Bombay was pleased to extend time vide order dated 9lh July, 1991. 15. The applicant submits that basically, this is an application for extension of time and modification of the amount of consideration to be recorded as Rs.68 lakhs or in the alternative, the application may be treated as a full-fledged fresh application only in respect of property bearing survey No.55/3 of village Borivade, District Thane. 18(g) The applicant submits that the property in question is not involved in any litigation. 18(h) The applicant submits that the trustees do not intend to advertise the property for sale but are proceeding with the transaction based on private negotiations and therefore, procedure as regards to the publication of public notice may please be dispensed with."

2.4. The ld. DIT(E) in these facts and circumstances proceeded to deny the approval u/s.80G of the Act to the assessee trust on the following reasoning:- “The agreement dated 17.06.1982 is between the trust and 'Samarth Development Corporation' whereas the agreement of property sold on 21.04.2009 is between the trust and 'New Shri Samarth Borivade Village Co-op, Hsg. Soc. Ltd. The trust has taken permission from the Charity Commissioner office on 17.06.1982 to sell land to "Samarth Development Corporation" whereas the trust has sold the land to "New Shri Samarth Borivade Village Co-op. Hsg. Soc. Ltd." There is a change in the identity of the purchaser, the trust should have taken prior permission of Charity Commissioner which it has failed to do so. ii) The trust has applied for extension of time with regard to conveyance which has lapsed on 16.07.1991. Thereafter no extension has been granted by the Charity Commissioner. Since the office of the Charity Commissioner has not given further extension, it implies that the trust had no right to sell the land without taking prior approval of the Charity Commissioner. The agreement entered into by the trust and the purchaser is illegal and void. iii) The applicant trust has sold the property without the prior approval of the Charity Commissioner. As per Appendix C, point 15 as reproduced above, the trust has itself made an alternative plea that the application may be treated as full-fledged fresh applications. This is because the trust has

6 ITA No.7781/Mum/2011 Sola Hakim Medical Research failed to obtain extension of time from Charity Commissioner after 1 6/07/1991 . iv) the land sold by the trust is to be exclusively used as a playground, it cannot be used for any other purpose. The trust has sold this land to a co- op. Hsg. Soc. Ltd. without intimating/taking prior approval of the local municipality/panchayat. Since the land in question is sold without getting proper value as the real worth of the land could be many times more. No submission in respect of valuing the land at Rs.68 lacs is made in the submissions filed.”

2.5. Finally, the ld. DIT(E) concluded that since trust has sold the land without taking prior approval of the office of Charity Commissioner, the transaction of sale of property made by the assessee was illegal and bad in law. Moreover, the land which was to be used for play ground in consonance with the main object of the assessee trust of imparting education , the sale of play ground land would amount to parting with the main object being pursued by the assessee trust. With these observations, he denied the grant of approval u/s.80G of the Act to the assessee trust. 3. Aggrieved, assessee is in appeal before us. 4. We have heard rival submissions. At the outset, we find that for the purpose of grant of approval of Section 80G of the Act what is to be seen is the compliance to conditions prescribed in Section 80G(5) of the Act. For the sake of convenience, the said provisions are reproduced hereunder:- (5) This section applies to donations to any institution or fund referred to in sub- clause (iv) of clause (a) of sub- section (2), only if it is established

7 ITA No.7781/Mum/2011 Sola Hakim Medical Research in India for a charitable purpose and if it fulfils the following conditions, namely:--

(i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 [***][***] or clause (23AA)] 5 or clause (23C)] of section 10: [Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if,- (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;]] (ii) the instrument under which the institution or fund is constituted- does not, or the rules governing the institution or fund do not, contain any provision for the transfer of application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) the institution or fund maintains regular accounts of its receipts and expenditure; ] (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 18608 (21 of 1860 ), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 19569 (1 of 1956 ), or is a university established by law, or is any other educational institution recognized by the Government or by a university established by law, or affiliated to any university established by law, or is an institution financed wholly or in part by the Government or local authority.

8 ITA No.7781/Mum/2011 Sola Hakim Medical Research (vi) in relation to donations made after the 31st day of March, 1992 , the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf [and] (vii) Where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been---------- (a) Established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and (b) Approved under the said clause (vi) for the previous year beginning on the 1st day of April 2008 and ending on the 31st day of March, 2009) 5. We find that the ld. DIT(E) had not brought any evidence on record to prove that assessee falls under any of the aforesaid negative conditions prescribed in the Act. In other words, no violation of conditions prescribed u/s.80G(5) of the Act had been pointed out by the ld. DIT(E) in the order. Once, the same are not done, then the assessee cannot be denied approval u/s.80G of the Act. In this regard, it would be pertinent to look into the relevant rule 11AA of the Income Tax Rules which are required to be verified / examined for grant of approval u/s.80G of the Act by the ld. DIT(E). For the sake of convenience, the relevant rule is reproduced hereunder:- [Requirements for approval of an institution or fund under section 80G. 11AA . (1) The application for approval of any institution or fund under clause (vi) of sub-section (5) of section 80G shall be in Form No. 10G and shall be made in triplicate. (2) The application shall be accompanied by the following documents, namely :— (i) Copy of registration granted under section 12A or copy of notification issued under section 10(23) or 10(23C) ; (ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less ; (iii) Copies of accounts of the institution or fund since its inception or during

9 ITA No.7781/Mum/2011 Sola Hakim Medical Research the last three years, whichever is less. (3) The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund. (4) Where the Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid. (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing : Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (6) The time limit within which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the [end of the month in] which such application was made : Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded.]

10 ITA No.7781/Mum/2011 Sola Hakim Medical Research provisions of Section 80G(5) of the Act and Rule 11AA of the IT rules. In case if the property has been sold by the assessee without the approval of Charity Commissioner, it is the look out of the office of the Charity Commissioner to take necessary action against assessee trust and that would not in any way jeopardize the grant of approval u/s.80G of the Act by the ld DIT(E) to the assessee trust. We would like to state that the purpose of seeking approval u/s 80G of the Act is to enable the donors to claim deduction u/s.80G of the Act in their returns in respect of contributions / donations made to the recognised trust such as assessee. Even otherwise, the allegations leveled by the ld. DIT(E) could be very much looked into by the ld. AO in the course of assessment proceedings of the assessee trust and the same cannot be a hindrance for denying grant of approval u/s.80G of the Act. 7. We find that the reliance placed by the ld. AR on the co-ordinate bench decision of Chandigarh Tribunal in the case of Shri Krishna Kirpa Gaushala Samiti vs. CIT(E) reported in 64 taxmann.com 420 is well founded wherein the CIT(E) in that case denied approval u/s.80G of the Act on the ground that the said trust was in respect of anonymous donations which are liable to be taxed u/s.115BBC of the Act. In the said judgment, the Co-ordinate Bench of Chandigarh Tribunal had categorically held that while granting the approval u/s.80G of the Act, the only provision as per the rules is that the rejection can be made if one or more conditions as laid down in Clauses-(i) to (v) of 80G(5) are not fulfilled. It was not held that there is no clause in Section

11 ITA No.7781/Mum/2011 Sola Hakim Medical Research 80G(5) of the Act which says that the approval u/s.80G be rejected if any institution accepts anonymous donations. Finally, it held that these factors are not relevant for granting approval u/s.80G of the Act and the same could very well be taken care at the time of assessment proceedingd by the ld. AO. 7.1. The ld. AR also placed reliance on the decision of Hyderabad Tribunal in the case of Jagdish and Kamla Mittal Museum of Indian Art vs. Director of Income Tax (Exemptions) reported in 47 taxmann.com 264 which also endorsed the similar view taken by the Chandigarh Tribunal (supra). 8. On merits, we find that the Charity Commissioner, Maharashtra State, Mumbai in application no.10/2010 u/s.36(3) of the Maharashtra Public Trusts Act1950 and miscellaneous application no.28/2010 and 29/2010 dated 26/05/2017 had addressed the entire issue by duly narrating the entire facts of the assessee with regard to the subject mentioned land sale transactions which are reproduced hereunder for the sake of convenience:- “These three proceedings are relating to the same property of the trust which have been sold by the trust by the sanction order passed by this authority which the applicants are challenging. They' are heard together. It would be appropriate to pass a Common Judgment and Orders in these cases. 2. The applicants herein are seeking revocation of the sanction order passed by this Authority on 31-07-1982 under Section 36(2) of the Maharashtra Public Trusts Act, 1950 (hereinafter referred as the Act for the sake of brevity) after 28.years by submitting application under Section 36(2) in October, 2010. It is not in dispute that on 9th December, 1989, Deed of conveyance was executed on behalf of the trustees by their constituted power of attorney Shri Walawalkar in favour of the purchasers. The impugned sanctioned order permitted the trust to sell 304 Acres of agricultural land in light of the agreement of sale between the parties for a consideration of Rs. 9,00,000 (Rupees Nine Lakhs only). As per the terms of agreement, the Deed of Conveyance is thus executed in favour of Samartha Development Corporation, M/s. Venus Housing Enterprises, New Shree Swami

12 ITA No.7781/Mum/2011 Sola Hakim Medical Research Samarth Borivade Village Co-operative Housing Society Limited (hereinafter referred as the purchasers). 3. It is worth to note that by the gift deed dated 30-03-1972, Settler Dr. S. A. E. Hakim and Smt. M. A. Hakim donated their 2/3rd undivided share in the agricultural land at village Borivade, Dist.Thane admeasuring 629 Acres. By the change report dated 8-8-1975, 2/3rd undivided share of the said Settlers in the said properties was recorded as the trust property. By the Deed of Conveyance, 304 Acres and 3 Gunthas land which was recorded as a trust property is, sold to the purchasers. By the sanction order the conveyance\deed was to be executed within a period of six months from the date of obtaining No Objection Certificate of Urban Land and 'Ceding Regulation Act, 1976, provided that such application for No objection Certificate is made within a period of month from the date of sanction order. 4. It is a matter of record that the Deed of Conveyance could not be executed within the time stipulated and therefore, on 29-01-1990 application for extension of time for executing the Deed of Conveyance was submitted. It was submitted by C.A. of trust Shri K. L. Walawalkar in the format of letter. The Superintendent of Charity Commissioner by the letter dated 16-04-1990 called upon Shri Walawalkar to submit an explanation why extension was not applied in time. Then by the letter dated 25-06-1990, the explanation was tendered by Shri Walawalkar. Then on 2; 04-1991, an affidavit was sworn by the trustees Mr. A. S. Hakim and Dr. R. P. Jehangir to explain the delay for seeking extension. According]/- on 9th July, 1991. the trustees were communicated by the Superintendent of this Authority that the period of validity of sanction order to complete the transaction in the matter was extended up to 16l July, 1 991. It is worth to note here that the Deed of Conveyance was infact executed prior to submission of the extension of time on 9-32-1989. The extension of time is granted later. It is therefore contended on behalf of the applicants that such ex-post' facto' sanction of time should not have been granted and is illegal. 5. Alongwith the revocation proceeding, two more proceedings initiated by the trust for modification in the sanction order have also been heard bearning Nos. 28/2010 and 29/2010. M.A. No.-28/2010 is submitted to permit the trust to sale property bearing S.No.55/3 admeasuring 0.12.1HRP mentioned in the sanction order and the agreement as well as the application for permission to sale. It is submitted that this land is also in fact sold by the trust along with other properties but through oversight it was not mentioned in the deed of conveyance. The purchasers have already paid Rs. 68 Lakhs for this property as per the agreement dated 21-04-2009. In the application, it

13 ITA No.7781/Mum/2011 Sola Hakim Medical Research is prayed that the sanction order may be modified and the trust may be .permitted to execute the Deed of Conveyance of this property also. In the proceeding No.29/2010, rectification is sought in description of the properties made in the sanction order to mention Survey No. 55/1 in spite of 55/2 at Sr,:No. 68. It is submitted that in the agreement dated 17-06-1982, the specification of the said two properties is also made and the sanction order permits the sale of properties described in the agreement and therefore, mere contradiction in the description of the properties in the sanction order will not affect the rights of the purchaser or the 6. In this background, the applicants are claiming revocation of the sanction order alleging that it is fraudulently obtained. Following are the grounds made out by the applicants— i. The trustees sold the property at a very low value without even ascertaining it from a Government Recognized Valuer. ii. The trustees did not pass a proper resolution for justifying their decision of selling the property. iii. Public notice for a very short period was given and on publication of notice on 28-06-1982 in Navakal and Free Press Journal, offers were invited on 7-7-1982. iv. The agricultural land could not have been sold to an non- agriculturist even then by violating the revenue authorities, the trustees sold the trust property to the purchasers who were non-agriculturists. v. The date of opening the tender was 8-7-1982 and they were signed by the trustee Dr. Smt. Dina Hakim on 9-7-1982 shows that the tender formality was merely a show. vi. The valuation report submitted before the Charity Commissioner prepared for the tap. purpose and it was not depicting the true value of the property. The true value of the property was Rs. 20.7 lakhs but the Valuer's report placed on record showed it at Rs. 9 Lakhs only? vii. The application under Section 36(l)(a) of the Act was not presented iik me proper form. No court fee stamps wee affixed an d even no prayer was made for authorizing the trustees to sell the property because the trust deed was not authorized them to sell the trust property. No sanction could have been granted in the absence of the trust deed provided ay authority to the trustees to sell the property. The land gifted to the trust was 2/3 of 629 Acres i.e. 420 Acres even then the entire property has been transferred to the purchasers for throw away for the price of Rs. 9 Lakhs only.

14 ITA No.7781/Mum/2011 Sola Hakim Medical Research viii. The trustees had their adjoining property to the trust property which they were intending to sell the same purchasers and therefore, they had personal interest in selling the trust property to the same developer. ix. The trustees did not receive the entire amount of consideration within six months from the date of sanction order. x. Nothing was mentioned in the application as to what the trustee is going to do with the balance land after selling 304 Acres of land. xi. In the Deed of Conveyance dated 9-12-1989 the constituted attorney Shri Walawalkar had shown the deceased trustee M.A. Hakim as a party to the document, though died on 1-8-1983. xii. The trustees had no authority to sell the property through the power of attorney holder as the trustees cannot delegate their powers. xiii. The trustees were granted extension on 9-7-1991 as they pointed out that no conveyance deed was executed by them. If that was so, the Deed of Conveyance purporting to be executed on 9-12-1989 was not a conveyance at all and was ab initio void. xiv. As there is no provision of granting ex-post facto sanction, the Deed of Conveyance dated 9-12-1989 beyond the stipulated period cannot be treated as valid transfer and the extension order dated 9-7- 1991 cannot validate the Deed of Conveyance executed much before the grant of extended period. xv. Market price of the property at present is Rs. 446 Cores, whereas the purchasers the Trust is intending to sell it at a throw value and therefore, to protect the trust, sanction order needs revoked. 7. The opponents were served with the notice and they have filed their reply. Their main contention's that the trust property once sold, it loses its character of a trust property and the Charity Commissioner cannot then pass any order which can affect the rights of the third party purchaser. It is further contended that neither the trustees nor the purchasers have committed any fraud upon the Charity Commissioner and therefore, the question of revoking the sanction order does not arise. The trust property transferred in favour of nominees of Samarth Development Corporation who have been not made party to this application and therefore, their non-joinder makes this proceeding under Section 36(2) of the Act prima facie riot maintainable.

15 ITA No.7781/Mum/2011 Sola Hakim Medical Research 8. So far as the exact area of 2/3rd of the undivided share in 629 Acres of the property, it is submitted by the opponents that the trust is actually gifted 305 Acres (2/3rd of 629 Acres i.e. 419 - 104 Acres land acquired by the State Government for the various purpose). Surprisingly there is no such corresponding entry in the Public Trusts Register maintained by the Public Trusts Registration Office, Greater Mumbai but this cannot be a reason for disbelieving the opponents because unfortunately the records. maintained by this Office are in a pathetic condition. There are many entries taken long back of 30 to 35 years, not endorsed by the officers or the superintendents. Change reports are also not taken cognizance for years together. About 40,000 registered trusts have not been yet included in the records. These facts may not be necessarily relevant in this matter but they are reproduced to show how much presumption of correctness can be attached to the entry of 629 Acres land in the trust record. 9. So far as the short time of the public notice is concerned, the opponents contend that notice published in the newspaper Navakal and Free Press Journal was published with a sufficient period before the tenders were accepted (publication on 28 June, 1982 and tenders were opened on 8-7-1982). It is also submitted that as per Rule 24 of the Maharashtra Public Trusts Rules, 1951, the process of publication and inviting tenders is not mandatory. 10. So far as the objection of the applicants regarding powers to soil to the trustees, it is contended that, the Charity Commissioner has powers to authorise the trustees to sell the property if it is necessary for If the benefit and protection of the trust. Accordingly, the Charity Commissioner has exercised powers in favour of the trust. It is contended that the trustees have received the amount of consideration long back before the execution of the sale deed and that for the "omission of specific number of properties S.No. 55/3, the trustees have submitted application baring No. 28/2010 and for this compliance, purchasers have already paid Rs, 68 Lakhs in addition though infact this property was contemplated in the agreement of sale as well as the application for permission. 11. It is submitted on behalf of the trust in this context that the entire trust property was sold by the Deed of 1989 but in the deed of conveyance, the number of property S.No. 5573 was not mentioned through over sight. That it is a minor mistake committed neither by the trustee nor the purchasers but by the scribe of the document. Still out of it, trustees are getting Rs. 68 Lakhs. That if this later agreement of 2009 for sale of this property is not permitted then there may be

16 ITA No.7781/Mum/2011 Sola Hakim Medical Research unnecessarily multiplicity of the litigation which may not be in the interest of the trust. 12. It is submitted that the trustees have been authorised to execute the sale deed even beyond the stipulated time by the order dated 19-7- 1991, that there would be no question of ex post facto sanction to the Deed of Conveyance executed in 1991 because the sanction is already accorded in 1982. That infact time is generally not essence of the contract in cases of immovable property and therefore, condition of time as imposed in the sanction order would not necessarily affect the right of the purchaser because such condition itself is contemplated under the Act, 13. I have carefully taken into consideration the record of the case and the said submission^;' the following points arise for my consideration. POINTS FINDINGS i. Is" the application maintainable as the trust property is sold by the Deed In the negative. of Conveyance dated 9-12-1989? ii. Is the sanction order dt. 31-7-1982 obtained by the trustees by practicing fraud In the negative. upon the Charity Commissioner? iii. Can the trustees be permitted to sell the land S.No. 55/3 admeasuring 0.12.1 H.R.P, In the affirmative at the consideration of Rs. 68,00,000/- as per the agreement dated 21-04-2009? iv. Can the sanction order be rectified in In the affirmative. the description of lands in the original sanction order in terms of prayers clause (b) in the M.A. No. 29/2010? REASONS As to Point No. (i) : - 14. At the outset before?' beginning to record the reasons of recording the said findings, Section 36(2) is reproduced for ready reference "36(2) The Charity Commissioner may revoke the sanction given under clause (a) or clause (b) of subsection (1) or, the ground that such sanction was obtained by fraud or misrepresentation made to him or by concealing from the Charity Commissioner, facts material for the purpose of giving sanction; and direct the trustee to take such steps within a period of one hundred and eighty days from the date of

17 ITA No.7781/Mum/2011 Sola Hakim Medical Research revocation (or such further period not exceeding in the aggregate one year as the Charity Commissioner may from time to time determine) as may be specified in the direction for the recovery of the property." 15. The words emphasised make it clear that the fraud or misrepresentation or concealment of the fact from the Charity Commissioner must be of the material facts for the purpose of giving Obviously, such fact should have happen before the Charity Commissioner passes the order and cannot be a subsequent fact. If any fraud or illegality is committed during execution' of the sanction order by the trustees or the persons collecting the amount on behalf of the trust or the purchaser in the process of executing the Deed of Conveyance then remedy may lie under any other provisions of the Act or law before any other competent authority, but certainly not under Section 36(2) of the Act because once the sanction order is executed and the trust property is conveyed to any other person, it does not remain the trust property. I found support to this proposition from the rulings, viz., 2006(1) Bom.C.R. Page 133 (Stella A. Machado and others v/s. A.H. Vadia Charity Trust and others), A.I.R. 1991 Bom. Page 220 (Mrs. Fatmabai B. Bachooali v/s. State of Maharashtra and others), 1989 Mh.L.J. Page 269 (Mahadeo Deosthan Wadali & others v/s Jt. Charity Commissioner & others), (1994) 96 Bom.L.R. Page 714 (Dr. Sam Sarosh Bhacca and others v/s P.V.Kakadc, Jt. Charity Commissioner), A.I.R. 2006 Gujarat Page 78 (Raghavjibhai Narjinhbhai Patel and others v/s Amroli Anjuman Fund through Trustee and others) and 2005 B.C.I. Page 107 (Motilal Girdharilal Shuana & others v/s. Dattatray Bandu Jagtap and others). 16 The learned counsel for the applicant vehemently argued in light . of the principles laid down by the Supreme Court in the cases -(1994) 1 Supreme Court Cases Page 1 (SiP..Chengalvarya Naidu (Deed) b- Lrs. v/s Jagannath (Dead) by Lrs. and others, and (1996) 3 Supreme Court Cases Page 310 (Gowrishankar and another v/s Joshi Atoba Shankar Family Trust and others) that when a fraud is committed, it is the duty of the Authority upon which it is practised to take a serious cognizance of it and vitiate the same. The principles laid down in these case laws explain the meaning of fraud and its effects, there cannot be no doubt in the proposition that-if a fraud is established, the order passed by the Authority which is outcome of such fraud would be a nullity. With respect to the learned counsel, I am of the view that these case laws would not be of much help to me for deciding the controversy. This Authority has a limited jurisdiction exercisable within the scope of Section 3 5(2) of the Act. Here, the issue is whether any fraud is committed and whether the order can be revoked after the Deed of Conveyance is executed as per the sanction order.

18 ITA No.7781/Mum/2011 Sola Hakim Medical Research

19 ITA No.7781/Mum/2011 Sola Hakim Medical Research Joint Charity Commissioner to revoke a sanction granted under Section 36(1) of the Act, after the sanction merges itself into a sale deed and the property loses the character as that of a trust property. Such a power of revocation has to be exercised only qua the property of the trust and not alter the sale deed, for the simple reason that when a sale deed is executed, the trust is then divested of that property and interest of third parties intervene. The property no longer then remains a trust property and the Joint Charity Commissioner loses jurisdiction over that properly. The petition has, therefore, to be allowed on this ground itself?" 18. It may be that certain facts affecting the legality of transaction are suppressed then also their cognizance, can be taken to revoke the sanction order before the property is actually transferred and not after it is transferred and has lost status as a trust property. It may be that the Deed of Conveyance is .executed after the expiration of the stipulated period during which the sale deed was to be executed. Yet the Deed of Conveyance cannot be declared void by this authority as it is a fact subsequent to the passing of sanction order and therefore, as observed above, it will not affect the sanctity of the sanction order. It cannot be forgotten that by the order dated 9-7-1991, the time limit for executing the Deed of Conveyance was extended. It is true that while getting this extension order the fact that the Deed of Conveyance is already executed was not brought to the notice of the Charity Commissioner. Yet such act of trustees would not necessarily affect the sanction order. In this context, I found substance in the submission of the learned counsel for the opponents that there is no provision in the Act of imposing condition of a particular time limit for execution of the Deed of Conveyance and that the sanction order merely permits the trustees to transfer the property subject to the other provisions in the relevant Acts, The submission of the learned counsel that in cases of transfer of immovable properties even if a time limit is prescribed in the deed of agreement between the parties, it cannot be made an essence of the contract so as to frustrate it after expiration of that time limit. 19. Be that as it may, this Authority is conferred very limited jurisdiction by Section 36 of the Act to grant permission to transfer the property to the trust, if the same is in the interest of the trust and it cannot go into the complicated questions of civil rights and title of the parties. More particularly in the case where the trust property is transferred to a purchaser, the Charity Commissioner cannot go into the question of legality or validity of Deed of Conveyance or the manner in which it is executed. Then it becomes the prerogative of the civil court or any other competent court but not the Charity Commissioner's Office. "With this perspective, I find that the

20 ITA No.7781/Mum/2011 Sola Hakim Medical Research application under Section 36(2) is not maintainable and therefore, finding on point No. (i) is accordingly recorded in the negative. As to Point No. (ii) : - 20. As mentioned in para No. 6 above, various grounds of attack have been made by the applicants to show that the trustees committed fraud upon the Charity Commissioner in securing the sanction order. I may deal with these grounds in the same sequence- i. So far as the value of the property, the contention of the applicants is that it was at a lower site and it was estimated in light Valuer’s Certificate prepared for tax purpose. The Valuers Certificate as on record of the sanction proceedings show that it is issued by S. S. Wadkar in light of the comparable sales transaction. About six comparable sale transactions have been referred by him of the lands in the area of village Kavesar and village Borivade. His estimation in light of the factors which are generally taken into consideration for assessing the value of the property cannot be doubted now after 35 years, without there being any other clear evidence. The learned Charity "Commissioner had examined this Valuer's certificate. Publication was also made for inviting the offers and thus, after ^following a proper procedure, the proposal of sale was considered by the learned Charity Commissioner. It cannot be therefore said that the trustees suppressed the real value of the property and mislead the Charity Commissioner. ii. The contention of the applicants that the trustees suppressed the fact that the purchasers are not agriculturists and therefore, the transfer to non-agriculturists of the agricultural property of the trust itself is in violation of the Maharashtra Tenancy and Agricultural Lands Act. Be that as it may, this ground may not be necessarily sufficient to hold the transaction void or outcome of the fraud because these provisions in Section 63 and on wards in Chapter-V of the Maharashtra Tenancy and Agricultural Lands Act permit the regularization also on payment of charges and even relaxation of the said condition in certain cases where the land is put to a particular type of use. iii. The contention that the Deed 'of Conveyance was executed by the constituted power of attorney and that one deceased trustee Smt. N. Doctor was also shown as a party may not also reflect upon the legality of the sanction order because this is subsequent event, necessarily cannot be taken into consideration as discussed above. iv. The ground that the application under Section 36(l)(a) was not presented in the proper form and no court fee stamp was even affixed and there was no prayer of authorising the trustees to sell the trust property are all the procedural aspects. The Charity Commissioner has the powers to authorise the trustees to sell the property even if trust deed does not authorise them if he finds that the

21 ITA No.7781/Mum/2011 Sola Hakim Medical Research transaction is in the interest of the trust. Accordingly, learned Charity Commissioner has authorised the trustees to sell the trust property. v. The contention of the applicants that trust was gifted;2/3rd of 629 Acres and out of that, only 304 Acres are transferred and there is no explanation of remaining land would also not affect the legality of the sanction order. The opponents have; offered explanation that about 104 Acres of land was acquired by Government for Forest and the remaining land of about 305 Acres was gifted to the Trust. Nobody had disputed this aspect particularly the owner of the land, the Settler or his legal heirs. The explanation offered by the opponents therefore, appears probable. vi. The ground that the trustees have their adjoining properties to the trust property which have been sold to the developer alongwith the trust property will also not necessarily affect the transaction between the trust and the purchaser, so also the fact that the trustees did not receive the entire amount of consideration within six months from the date of sanction order cannot affect it because these are the subsequent facts. vii. It may be that the present market price of the property is in Crores. Yet on these grounds after 30 years, the transaction which has already been shaped by executing the Deed of Conveyance cannot be interfered by the Charity Commissioner by invoking his power under Section 36(2) of the Act as the same may not be necessarily in the interest of the trust and it would be without jurisdiction also because the property is already transferred and not a trust property. The property was sold at Rs.3000 per,, acre. The valuers report justified it in light of the comparable, sale transactions. For the reasons aforesaid, I answer the point No. (ii) also in the negative. As to Point No. (iii) : - 21. The land S.No. 55/3 admeasuring 0.12.1 H.R.P. was included in the agreement between the trust and the purchasers and this fact is evident from the copy of the agreement placed on record of the sanction proceedings. In the submissions made before the then Charity Commissioner in respect of the application for sanction, this number 55/3 is mentioned. In the sanction order also, this number finds place. The sanction order contemplates consideration of Rs. 9 Lakhs for the lands described in the agreement. The relevant portion of the order reads as under:- "Sanction is hereby accorded under Section 36(l)(a) of the B.P.T. Act, 1950 to the sale of the immovable property of the above trust bearing ….

22 ITA No.7781/Mum/2011 Sola Hakim Medical Research 84 pieces of land ... situated at village Borivade, District Thane in favour of Samarth Development Corporation for the price of Rs. 9,00,000/- only as per the terms and conditions agreed in the agreement for sale." In the Deed of Conveyance, however, the number of this piece of land S.No. 55/3 is not mentioned and therefore, the trustees have again entered into an agreement to convey this piece of land also at the consideration of Rs. 68 Lakhs. Accordingly, the trustees have entered into an agreement with the purchasers on 21st March, 2009.Trustees have also got the land valued from the Government Recognised Valuer and in light of it, it is proposed by the trust that it may be permitted to either execute a Deed of Conveyance in respect of S.No. 55/3 for consideration of Rs. 68 Lakhs or the earlier order dated 31-07-1982, sanction to transfer may be modified. In the circumstances, question that arises is whether refusing permission to transfer this piece of land S.No. 55/3 at the consideration of Rs. 68 Lakhs would be in the interest of the trust or it is likely to involve the trust into the litigations. 22. As discussed above, this land is a part of the property to be sold by the Trust to the purchaser and it was agreed between the trustees and the purchaser to sell trust properties including this piece of land at the consideration of Rs. 9 Lakhs. As in the Deed of Conveyance, this property could not be mentioned and perhaps, the parties noted it after a long time, they have agreed to execute a fresh Deed of Conveyance at fresh consideration of Rs. 68 Lakhs. The constituted power of attorney Shri Walawalkar who has intervened this proceeding and filed his affidavit, has stated in para-10 of his application (Exh. 10) that collective area of the property which was permitted to be sold was considered and conveyed to the purchasers. If this piece of land is already in possession of purchasers, there may not be any propriety in refusing the proposed sale transaction of piece of land at the consideration of Rs. 68 Lakhs. Finding on point No. (iii) is therefore answered in the affirmative. As to Point No.(iv) 23. It is quite apparent that there is an error in mentioning the area and survey numbers, there appears erasion also at Serial No. 68 in the description of S.No. 55/1. Rectification as prayed in the prayers clause (b) in the Misc. Application No. 29/2010 can therefore, be allowed as prayed for. The point No. (iv) is therefore answered accordingly. As to Point No. (V) : -

23 ITA No.7781/Mum/2011 Sola Hakim Medical Research 24. In a nut shell, for the reasons recorded, I am inclined to reject the application for revocation of the sanction order. Execution of a Deed of Conveyance for transferring the land S.No. 55/3 can be allowed at the consideration of Rs. 68 Lakhs, so also the rectification is allowed as prayed for. Resultantly, following order is passed- ORDER 1) Application No. 10/2010 for revocation of the sanction order is hereby rejected. 2) The trustees are permitted to sell the trust property bearing Survey No. 55/3 admeasuring 0.12.1 H.R.P. situated at village Borivade, Taluka and District Thane in favour of New Shree Swami Samartha Borivade Housing Company Pvt. Limited for the consideration of Rs. 68,00,000/- (Rupees Sixty Eight Lakhs only) and on the following terms and conditions:- i) The sale deed shall be executed within a period of six months from the date of this order. ii) All expenses including stamp duty, registration charges, etc. shall be borne by the purchaser. iii)The amount of consideration of Rs. 68,00,000/- (Rupees Sixty Eight Lakhs only) shall be kept intact as a corpus in the form of investment permissible under Section 35(1) of the Maharashtra Public Trusts Act, 1950 and it should not be withdrawn without prior permission of this Authority. iv)The interest accrued on the investments shall be utilized only for the purpose and objects of the trust. v) This permission shall be subject to all the relevant laws and rules applicable to the transaction and the property as well. vi) The trustees are directed to file necessary change report after completion of the sale transaction. 3) Rectification in the description of the lands be made in the original sanction order in terms of prayers clause (b) in 'the Misc. Application No. 29/2010, The trustees shall make rectification in deed of conveyance accordingly within six months from the date of this order.

24 ITA No.7781/Mum/2011 Sola Hakim Medical Research 9. It would be pertinent to note that order of the Charity Commissioner dated 26/05/2017 have been passed much after denying the approval u/s.80G of the Act by the ld. DIT(E). But we find that even on merits, the assessee had made out its case by stating that the Charity Commissioner had duly granted approval for its land sale transaction by duly appreciating the entire facts on record. Hence, the allegations leveled by the ld. DIT(E) for rejecting the grant of approval u/s.80G of the Act, though not relevant for rejecting 80G approval, has been proved to be baseless. 10. In view of the aforesaid findings and respectfully following the various judicial precedents relied upon hereinabove, we hold that the ld. DIT(E) was wrong in denying the grant of approval u/s.80G of the Act in the facts and circumstances of the case. Accordingly, we direct the ld. DIT(E) to grant approval u/s.80G of the Act to the assessee trust from the date of its application. 11. In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 26/04/2019

Sd/- Sd/- (AMARJIT SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 26/04/2019 Karuna Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, सत्यापित प्रतत //True Copy// (Asstt. Registrar) ITAT, Mumbai